Lost a bargain buy on a big apartment, is it over?

Question

Hello BP,

I'm sad to say an amazing deal might have fallen through my fingers. There was another buyer who put in an offer a week before mine and his offer was less money but also less time. I didn't know the sellers were short on time and they didn't even negotiate with me. I was asking the broker if my offer was competitive with the other, since she is the selling broker as well, and she said it was.

All I received was that the sellers accepted the other offer. :(

HOWEVER! I am thinking that there's maybe a 20% chance this deal is not done. I plan on upping my offer price and lowering the due diligence time and resubmitting in the case the current buyer has any hesitations. What do you all think about the likeliness that I might still have a shot? I can get the loan I need within 30 days, and if I can do the due diligence on this apartment within that time I think that's the same as the current accepted offer.

Generally I know brokers don't accept offers past one being accepted. But perhaps she could just let the sellers know of the numbers I'm willing to go to?

Jonathan Johnson · Answer

@David Dachtera @Chris Tracy @John Jacobus @Mindy Jensen @Dash Siva @Mannie Greenspan

After faithfully following for a month, I had given up calling every week asking how things were going. Now, after two months, the buyers were asking for too many extensions and the sellers have asked if I'm interested in submitting an offer.

Assuming I can convince my wife to come along on this, I may have a killer apartment deal!

Thank you all for your encouragement, support, and advice.

Mindy Jensen · Answer

@Jonathan Johnson , as a seller, I am more apt to negotiate with the buyer I'm under contract with if I do not have a backup offer. I am less likely to negotiate if there is another offer willing to waive inspection, pay cash, close fast, etc.

Make your backup offer as enticing as possible by removing as many contingencies as you are comfortable with. Do not remove any contingency that would cause you to lose sleep over it. Better to not have a good deal than be stuck with a bad one.

Account Closed · Answer

Yep, they snowed you for a month now they are crawling back.  Time for a deal:)

"I'm sorry, I allocated some of my money into another deal but I can offer you INSERT_BETTER_DEAL_FOR_YOU_HERE on your apartment."

Joel Owens · Answer

Jonathan Johnson you might not want to push too hard with terms and price. A lot is knowing your market. If a deal like this pops up every month that is different than one popping up once a year.

It might be out of a courtesy they are coming to you first since you have expressed ongoing repeated interest in the property. If others on the market do not know it is available again and limited inventory then re-exposing it to the market might drive the price up again. They might also get lucky and land an all cash buyer or a 1031 buyer looking to park money and pay a premium.

Sellers tend to take reductions easier over small bites. So for example I know buyers that come in real low and then sellers say wait to see what the market does and someone else beats them out. The person beating them out by the time they close arrive close to the offer the other buyer made they just make small reductions and credits from the seller as they go through the due diligence process.

If you have the seller under contract for awhile locked into an agreement they cannot get out of then the seller is usually much more invested in the deal and willing to negotiate during the process. Now that is a 2 way street as the seller would like to get the buyer (pregnant) on the deal meaning have a lot of legal expenses,report costs paid for,etc. so that it is painful for the buyer to back out.

I usually have a clause that due diligence does not start until ALL items are received from the seller. This way they do not play games and give a few items and buyer spends a lot of money only to find the seller giving them critical items to review just a few days before due diligence expires. You want to keep the seller honest and make sure they have a great package of due diligence going in for you to review. The lender will want you to start spending money right away but certain items you want to verify as correct before getting in to deep with a property.

If you want to stay local and limited product comes up then you have to be careful about how you proceed. You have to make a decision as a unit with the wife. Some women are the investor leaders and some men are in the family. Some women love to invest and be involved and some could care less. My wife loves to listen to my day in real estate but is not active in it and loves decorating for the seasons etc.

When you talk to the significant other where you might see OPPORTUNITY they might see RISK and unknowns. It's all about varying mindsets and the filters we see things through in this world. My wife has seen my real estate career do very well for many years now so she trusts me when it comes to real estate and money decisions. We still talk about things............ : )

Bryan Reid · Answer

good luck!

And remember a property is not sold until it's closed.

Brokers will absolutely take backup offers - happens all the time just for instances like this one.

Jay Hinrichs · Answer

@Jonathan Johnson  time to drive a hard bargin..

John Jacobus · Answer

@Jonathan Johnson Definitely continue to follow-up with the broker and check on the status of the deal in the coming weeks.  Deals fall through all the time and you want to be positioned to act quickly in the event this happens.  Many experienced multifamily investors credit their follow-through with opportunities that they initial lost to other bidders as a key source of successful deals.  Many investors give up and move on after they initially lose in the bidding process.  However, if this property really interests you, continue to stay in touch with the broker, remind them that you have your act together and can move quickly if/when needed, and generally position yourself so that you will be the first person the broker calls if the deal falls through.

Chris Tracy · Answer

Also, ask if the broker has anything else you could buy... It's never over!

David Dachtera · Answer

@Jonathan Johnson,

Some brokers keep a "backup offer" in case a deal falls through. Maybe ask about that ...

Jonathan Johnson · Answer

I want to be careful how I say this, but, "This deal is soo good." I'm just matching the previous buyers offer. Even if I come up 200k it'll still be a good deal. Tired family owned apartment, totally paid off, and they just want to be done with it. My last offer was for more money but they chose a buyer who could close more quickly. Money is not the priority for them, time is.

I'm pretty sure I have a lender that can fund this deal in <30 days so I'll have my fingers crossed.

Lost a bargain buy on a big apartment, is it over?

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